Edit: A lot of people fixating on the fact broker-dealers aren't investment advisors...

https://www.sec.gov/rules/other/2013/34-69013.pdf

SEC has already started providing guidance on that loophole. They're not a fiduciary, but there's a want from the SEC to have their operation start to be more in line with if they were one ("harmonization")

After all RH does advertise popular stocks, they put out news branded digests of the market, it does show users gamified views of things like options, they have an entire "learning platform" meant to guide you through the market.

It's not an investment advisor, it doesn't have a fiduciary duty but the SEC wants broker-dealer behavior to better reflect the fact that retail investors assume that the platforms they use to trade are aligned with their financial goals

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So disclaimer: I was holding large amounts of GME and AMC and sold this morning as a direct result of this news.

But I really don't get why people are so shocked.

People who started this wanted to buy and hold until shorts are kill.

Then people who heard about this plan after it started working joined, they still wanted to hold but their reasoning was starting to get a little removed from the original goal. This group is slightly bigger than the first

Fast forward a few days and suddenly this stock that just keeps going up by hundreds of dollars a day is in the news, people don't quite get what's happening, but it looks like a magical money fountain. And as a bonus this magic fountain is a big FU to the man? Sign me up! This group is exponentially bigger than the first, and exponentially less understanding of why this is happening.

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At this point retail money is flooding into this stock left and right, and people are starting invest money they cannot afford to lose.

The problem for these brokers is when this musical chairs dance stops, retail investors will be holding the bag. Full stop.

But more importantly, those clueless people just buying GME because they have some vague idea of "it goes up" and "we're rebelling" are going to lose their shirts. The people in the first group who were doing this for the principle of it and as a YOLO don't really care, it's "fuck Melvin" all the way...

But the people in the last group are going to feel blindsided.

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This feels like damned if you do, damned if you don't. The action of trying to insulate these people from losing their money will actively make people lose money. The dip to the low $130 was directly caused by the actions they're taking.

But on the flipside, imagine what would have happened during the rally to $400 this morning. We likely would have seen another breakout that puts all options ITM...

The fact is, the dance will end. The idea is buy and hold... but for the newest cohort there's an implied "until the money fountain stops".

And the higher the share price is when that happens, the more it will hurt. (and make no mistake, some hedge fund might be hurting, but the big guy can navigate this. If it takes making Congress halt these stocks they'll do it)

This has been a fun ride, and thrust the insane inequality of our financial systems for normal individuals and cash flushed "institutions" into the spotlight... but I can't pretend I don't understand why it's happening.